Under Which Circumstance Can a Firm That Has a Monopoly

question 239

Multiple Choice

Under which circumstance can a firm that has a monopoly on water (which is a necessity) charge a high price for water

• A)only if the marginal cost of producing water is high
• B)even if the marginal cost of producing water is low
• C)only if the firm is a natural monopoly
• D)even if the demand for water is low

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Definitions:

Finance Company

A financial institution that offers loans, leases, and other financial services to consumers and businesses.

Conditional Sales Contract

An agreement for the purchase of goods that does not fully transfer ownership to the buyer until certain conditions, typically full payment, have been met.

Simple Interest

Interest calculated only on the principal amount, or the initial sum of money borrowed or invested, without compounding.

Finance Company

A business that provides loans to individuals and companies, unlike banks, primary lending revolves around installment credit and financing consumer purchases.